Black Economy Flourishes in North Korea

North Korea’s black economy becomes a way of life as the poor and entrepreneurs look for alternative means of survival, according to Reuters. The underground market signals a slow ease to capitalism, no matter how much the government denies or tries to stop it.

The underground economy is in many downtrodden economies across the world, where few job opportunities and lacking growth force citizens to find innovative ways of making a living. However, North Korea’s black economy is different because it could lead to massive social and political change.

North Korea’s black economy becomes a way of life as the poor and entrepreneurs look for alternative means of survival, according to Reuters. The underground market signals a slow ease to capitalism, no matter how much the government denies or tries to stop it.

The underground economy is in many downtrodden economies across the world, where few job opportunities and lacking growth force citizens to find innovative ways of making a living. However, North Korea’s black economy is different because it could lead to massive social and political change.

Regardless of the government’s isolationist stance, North Korea cannot escape the flow of goods manufactured within the country, including ones shipped across the border, and one can say the same of other despotic regimes.

Myanmar is one example of a tightly controlled economy that is undergoing a slow liberalization process, and North Korea follows the same path, but the difference between the two autocratic regimes is that Burmese authorities recognize the need to foster an open economy, while North Korean leadership actively suppresses an open market system.

Officials stress reform instead of market-based economics, but such changes will not be enough because many North Koreans have already shifted toward a capitalistic mindset.

A secret market system became more prominent throughout the decades, as people in the countryside and elsewhere found new ways to counter agricultural collapse, rationing issues and the fall of the Soviet Union. The black economy eventually spawned a rising middle class known as ‘donju,’ which means ‘masters of money.’

The government responded by limiting the number of won that could be swapped for a foreign currency in 2009, which restricted the flow of capital and growing wealth. Nevertheless, more people have been buying a surplus of new goods, including baby items, cell phones, solar panels, motorized bikes and LED bulbs. A majority of these items come from neighboring China and South Korea.

North Koreans once hid cash from the government, but more people buy openly as a proto-capitalist system transforms society. Further, foreign banks can loan money to businesses, showing leader Kim Jong-Un’s willingness to cater to the business sector for the sake of stability.

The government recognizes the rising tide of consumerism, which is why North Korean firms produce a vast array of products to cater to growing demand. North Korea’s centralized control grid remains strong, but leadership must tow a delicate line in keeping people placated to a level that avoids massive instability.

No one knows how Kim will respond to these societal changes, but experts believe North Korea will eventually become a market-based economy in the same way as China.